WHEN SHOULD YOU SET UP A BUSINESS?

The number of people planning to start their own business is on the rise. These days, setting up a business is easier than ever before – a business can be run under any organisational or legal form, or even as an unregistered business, provided certain conditions are met. When do you need to set up a business? You can read about this below.

Business and unregistered business – when do you need to set up a company?

Under current legislation, a business can be run under any organisational and legal form, but also as an unregistered business. Possible organisational and legal forms include sole traders, civil partnerships and commercial companies, which comprise capital companies and partnerships. Capital companies include limited liability companies, simple joint-stock companies and joint-stock companies. Partnerships, on the other hand, include:

• general partnerships,
• professional partnerships,
• limited partnerships,
• limited joint-stock partnerships.

Of course, due to its ease of access, the most commonly chosen organisational and legal form is a sole trader, but many people can start a business as an unregistered business. This is not always possible, so it is worth knowing when you should set up a business.

Key rules regarding unregistered business activity

Many people wonder when they need to set up a business. An unregistered business may be run by individuals who have not operated a sole trader business in the last 60 months and who generate a low level of income. Unlike a sole trader business, it is not registered with the Central Register and Information on Economic Activity (CEIDG). It is important to note that people running an unregistered business are obliged to record their income and pay taxes. This option has a number of advantages. Firstly, as with a sole trader business, the entrepreneur may provide services or engage in trade. Secondly, they may also employ staff. Furthermore, they are not required to pay social security contributions (ZUS) or make advance payments towards income tax. However, one should bear in mind the drawbacks of this arrangement – a lack of access to external financing intended for companies, limited trust from customers and business partners, and a lower level of prestige for the business.

When do I need to set up a business?

There are situations where it is not possible to operate a business as an unregistered sole trader, and the entrepreneur must set up a business, regardless of the threshold above which a business must be registered. When you should set up a business depends not only on the level of revenue, but also on the sector in which the business is to be operated. Certain activities require a permit, licence or entry in the register of regulated activities under the provisions of specific legislation.

So, when is it necessary to set up a business? For example, when there is a desire to run a business related to, say, organising tourist events. However, there are other reasons why a business must be set up, as an unregistered business cannot be operated as a partnership.

When should you set up a business?

Apart from that, when else should you set up a business? When the company intends to finance its operations using external funding. For example, from EU funds or the local council. It is worth noting that grants from the jobcentre for starting your own business are substantial, but may amount to a maximum of six times the average wage.

From what amount do you need to set up a sole trader business?

The main criterion determining whether a business will operate as an unregistered enterprise or require registration with the CEIDG is the level of income generated. From what amount do you need to set up a business? Under current regulations, from July this year, the revenue threshold below which there is no obligation to register a business is 2,700 zł gross per month.  This means that if an entrepreneur generates gross monthly revenue of PLN 2,701 or more, they must register their business in the register.